Any positive economic profit or positive net present value must arise from

Question

Quizplus · Accepted Answer

Positive economic profit or positive net present value can arise from various sources, including:
A) Market imperfections or inefficiencies such as a monopoly situation. When a firm has a monopoly or significant market power, it can set prices above the competitive level, leading to economic profits. Market imperfections can also include barriers to entry that protect the firm from competition.
B) Cost-saving projects that allow the firm to reduce costs below the current level, such as economies of scale and access to distribution channels. When a firm can reduce its costs through economies of scale, it can produce at a lower average cost, potentially leading to higher profits. Similarly, having access to efficient distribution channels can reduce costs and increase profitability.
C) Government contracts or preferences. Firms that secure government contracts may be able to earn economic profits, especially if the contracts are awarded on a non-competitive basis or include favorable terms. Government preferences, such as subsidies or tax breaks, can also contribute to economic profits.
Therefore, all of the above statements are correct in explaining potential sources of positive economic profit or positive net present value.

Any Positive Economic Profit or Positive Net Present Value Must